A few weeks ago, I created a method outline to judge the viability of Amazon’s investment in Indonesia by 2018. This consisted of a few calculations to determine the average basket size and the ratio of orders to people. I also conducted an interview with the two owners of Mumu, and gained valuable insight concerning Indonesia’s e-commerce market. Although I spent a large majority of my time on research, I encountered some trouble finding the total number of orders in each individual country as Amazon does not disclose that information. So instead I decided to take the following steps:

Retail sales penetration:

  1.  For each country find total retail sales per year
  2. Amazon sales per year in that country
  3. Divide no. 2/no. 1
  4. Calculate average penetration
  5. Calculate total retail sales in indonesia
  6. Find total online retail sales
  7. Use Lazada total sales times market share to find the total size of the retail market in Indonesia

Amazon market share:

  1. Find the total online sales in their 4 most successful makets
  2. Find Amazon’s net sales per country
  3. Divide no.2/no.1 for each country
  4. Add all the values in no.3 together and divide it by 4 to find the average market share
  5. Assuming that Amazon captures the average (mean) value of their successful markets, is it still viable?

I also added four sections which serve as the argument. The benefits of operating in Indonesia are under the titles: “Middle class and consumer behaviour” and “mobile / desktop usage”. The challenges of operating in Indonesia is under “Infrastructure that facilitates e-commerce” and “Laws and regulations”.